AddLife AB (FRA:1AD1) Q3 2024 Earnings Call Highlights: Strategic Moves and Market Challenges

GuruFocus News
3 min read

In This Article:

  • Net Debt: Unchanged during the quarter.

  • Leverage: Remained at 3.6.

  • Interest Coverage Ratio: 5.4 this quarter.

  • Equity Ratio: 40%.

  • Labtech Organic Growth: 3%.

  • Labtech Margin: 8.9% for the quarter.

  • MedTech Organic Growth: 3%.

  • MedTech EBITA Margin: Increased to 10.7% from 10% last year.

  • Cost Savings from Camano Closure: SEK15 million per quarter, with full-year savings of SEK60 million and a cash flow effect of SEK90 million.

  • Group Organic Growth: 3%.

  • Year-to-Date MedTech Margin: 11.6%, up from 10.3% last year.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • AddLife AB (FRA:1AD1) reported a 3% organic growth in both LabTech and MedTech segments, indicating stable performance despite challenging market conditions.

  • The company secured several important and profitable tenders in multiple countries, which are expected to positively impact Q4 results.

  • The acquisition of Bonsai Lab, a leading Spanish distributor in cell and molecular biology, is seen as a strategic move into a prioritized growth segment with good profitability.

  • MedTech margins have improved, with EBITA margin increasing to 10.7% from 10% in the same quarter last year, driven by performance improvement initiatives.

  • The closure of Camano was completed as planned, resulting in cost savings of around SEK15 million per quarter, contributing to a full-year savings of SEK60 million and a cash flow effect of SEK90 million.

Negative Points

  • There was a noted weakness in demand for advanced and high-margin instruments in the LabTech segment, with some projects being delayed.

  • New product launches have been slower than expected in reaching sales goals, impacting margins.

  • The UK and Swedish markets have been unusually weak, affected by factors such as NHS strikes and staffing shortages.

  • Operational cash flow remained flat in Q3, and net debt was stable rather than decreasing due to the acquisition of Bonsai Lab.

  • Sales outside of Europe, particularly in China, have been significantly down, impacting overall performance.

Q & A Highlights

Q: Can you provide more information on the slower ramp-up of new product launches and the impact on margins, particularly in relation to the Bonsai Lab acquisition? A: Fredrik Dalborg, CEO, explained that while Bonsai Lab products are advanced with good margins and healthy growth, the slower ramp-up is more related to general market hesitancy in instrument sales, particularly in diagnostics and research fields. He noted that this is a common trend seen across the industry, with expectations for improvement in Q4 as budget cycles conclude.

Recommended Stories